China wants to open up its 54 Trillion financial services sector to foreign firms.
Even a small part can be very lucrative for financial firms.
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China has been opening up its financial sector over the last three years. This gives foreign firms unprecedented access in China’s largest capital market and most populous country.
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Financial Situation in China in 2022
Chinese and foreign financial institutions have been betting on greater business opportunities in one sector that Beijing is still keen to enter: finance.
The futures market is where U.S. businesses and Chinese businesses collaborate more, and where China could gain more global influence.
Citigroup however, stated that China’s role as a global price-setting agent will remain limited because of capital controls.
Citigroup, SocGen are Among First Foreign Banks to Plan Own China Brokerages
Citigroup, JPMorgan Chase, and Goldman Sachs all have huge potential profits. They are unaffected by Beijing’s abrupt policy changes and frictions with the United States.
China’s financial industry is attracting more investment from financial institutions, even though analysts believe that major changes may be a ways off.
China’s authorities are determined to expand foreigners’ access to the local financial markets, regardless of geopolitical tensions or the coronavirus virus pandemic.
Beijing wants more foreign capital to enter the country, and to increase international use of its currency (the yuan/renminbi). Foreign investors want to be part of China’s growth as the world’s biggest economy.
The Chinese futures market is one of the latest developments in the industry. Futures traders can trade contracts to speculate on future price changes or protect against losses.
“As China introduces international (futures), contracts such as the copper contract from (the Shanghai International Energy Exchange),” said Rick Chang (general manager for Greater China at CQG, a U.S.-based financial trading and data software company. source
Greater influence on global prices
Copper became the latest Chinese futures contract that overseas investors could trade via the Shanghai International Energy Exchange (or INE) in November.
Three years after its launch, the Chinese crude oil contract is the third most traded worldwide for the commodity. However, it is far less than the benchmark Brent crude and the U.S. crude oils futures, TTI.
The Shanghai International Energy Exchange stated in a statement to CNBC that they have seen an increase in overseas investors trading at INE, covering more than 20 countries and regions across five continents.
The exchange also launched English-language courses last year on the Chinese futures market, a sign of its desire to attract foreign investors.
Pricing power is a key component of a long-term goal to increase global influence.
China is the largest consumer of major commodities in the world, but its financial markets are closed. Futures contracts that are traded in Chicago or London determine the prices of products from iron ore and copper.
Authorities added futures and other products to the investment channel that allows foreign capital to China in November as another step towards opening up the local financial market to foreigners. The Qualified Foreign Institutional Investor (QFII program) was previously restricted to mainland-traded stocks.
Chinese firms go abroad
CQG, a global strategic partner, strengthened its partnership with Nanhua Futures, a Hangzhou-based brokerage in August to reflect growing international interest in Chinese futures.
The deal will give overseas access to six futures products listed on three Chinese exchanges. These include crude oil, rubber and low-sulfur fuel oils. Iron ore, purified terephthalic Acid (PTA) is also used in polyesters.
In recent years, the relationship between China and the USA has deteriorated significantly. The world is now focusing on the ‘decoupling of the two countries and their reduction in interdependencies. This is evident in the US’ trade war with China, which was led by Donald Trump. This trade war began as a dispute over tariffs and became a conflict that targeted Chinese tech companies like Huawei. It also reached the financial markets. Despite all this, financial relations are expected to grow.
China US situation
There have been warnings from the US that Chinese citizens and businesses could freely access the US financial system. While most commercial transactions are subjected to restrictions and tariffs, financial transactions generally are not. Trump responded by removing Chinese telecom companies from US stock markets, banning some public pension funds investing in Chinese companies, and requiring US-listed Chinese companies comply with US accounting rules. He also imposed financial sanctions against individuals.
These policies won’t make much difference. The number of portfolio claims between the residents of these two countries is huge and growing. China has a greater investment in the US than China in China. According to a Rhodium Group report, US residents have claims on approximately 1.2 trillion USD of debt and equity securities by 2020. Chinese residents claim on 2.12 trillion USD. Chinese government holdings of US Treasury securities account for 1 trn USD in Chinese portfolio claims.
IPOs in China
Many Chinese companies also list their stock on US exchanges.
The NYSE listed 217 Chinese companies
The NYSE listed 217 Chinese companies with a market capitalization totaling 2.2 trn USD in 2020. Tencent and Alibaba were also included. Although Chinese companies have different goals when they list there, most often it is to satisfy USD financing requirements and secure higher stock-market valuations.
Foreign direct investment (FDI), is also very high. The US has spent more in China over the last 30 years than China. This could be due to a number of factors, including China’s capital controls which discourage citizens from purchasing assets abroad and US investment screening. According to the US Congressional Research Service, cumulative FDI from 1990 to date is 258 bn USD for US and 152 bn China.
It will be hard for the US government remove a vast tangle of investments.
The US government has limited control over the flow of money from China to the US at this time. Liberal democracies usually have limited controls over capital outflows unless the recipient country is hostile (like North Korea). Because they interfere with property rights of citizens or companies, controls are rarely implemented and often limited. Trump was only able take minor steps to defy this precedent. Any further would likely provoke resistance from business and politics.
The US, on the other hand, has greater power to restrict Chinese investment in the US.
It can, for instance, ban Chinese banks from buying shares on US exchanges. There are many precedents for restrictions on foreign investors – they were the norm until recently in the West and still remain the norm today in China. Any US action on this front would come with huge costs, because of the immense ramifications. This has prevented the US from taking large-scale actions.
First, China could be provoked so severely that it might choose to sell its US treasuries as a financial retaliation. This could potentially lead to a financial crisis and shake the US financial system. The US Federal Reserve would need to purchase treasuries if it wanted to stop that. It would almost certainly cause more inflation and a depreciation in the US dollar. This would result in a decrease in the US’s purchasing power and leave many Americans less wealthy.
Second, financial flows to the US are clearly beneficial for certain sectors of the economy. Net flows to stock and property markets increase liquidity, which helps lower financing costs. Asset prices also benefit from more liquidity. A chain reaction of losses could occur if these flows stop. Even if there were no chain reaction, falling returns could hurt pension savers as well.
While some Americans want to limit financial relationships, China and investors don’t.
China is trying to integrate itself into global financial systems by opening its doors to foreign investors, and allowing foreign financial institutions within its borders to set up fully-owned ventures. Inbound capital is important for market discipline, currency management, and growth. It also helps the yuan to gain global popularity. Stock and Bond Connect programs enable investors in Hong Kong trade on the mainland with no restrictions and Chinese investors trade in Hong Kong with certain limitations.
These programs and others have become very popular. In 2020, the total turnover of the Hong Kong, Shanghai, and Shenzhen Stock Connect programs was 18 trn CNY. This is almost twice the amount that it was in 2019. Bond Connect now has 2400 investors, and generated 588 billion RMB in January. All these equity and debt issuers are open to foreign investors contributing capital. Chinese investors are delighted that they can legally diversify into foreign financial products.
US financial firms
As long as US investors have been underweighted in Chinese securities, they are eager to increase their China investments. In general, higher investment returns are a result of Chinese economic growth outperforming global growth. According to the IMF, China’s economic growth will reach 8.1 percent by 2021 and global growth will be 5.5%. This will lead to increased capital inflows to China.
China and investors desire to see deeper financial ties between the US, China. While some parts of the US government may resist, they are basically powerless as the short-term consequences if the relationship is severely limited would be severe. Any significant change in financial relations will not occur unless China does not overstep the red lines set by the US, such as by acting militarily beyond its borders. They are more likely than not to grow and deepen.
Foreign financial services looking to enter China’s market must communicate with potential Chinese clients. This is the biggest problem.
First , Success in China is a matter trust.
Chinese people won’t trust financial institutions they don’t know when it comes to money, and especially how to store them.
You need to maintain a positive brand image online and offline in order to attract investors and customers. You can make yourself visible on various Chinese social media networks starting with Wechat. Trust is earned by ensuring that your brand is prominently displayed in search results.
Foreign investment firm Need a Website in Mandarin and Baidu SEO/SEM
We have Worked on Dukascopy paid advertising & Marketing campaign to help the bank get visibility on the Chinese Internet
You must have your own website on the most popular Chinese search engine if you want to be successful in China. This will help you to be more visible and increase your authority.
Baidu is China’s most used search engine, answering 70% of all queries. It’s structured as an ecosystem (Baidu Search Promotion, Baidu Video Baidu Maps Baidupedia, Baidu Video Baidu Promotion, Baidu Video Baidu Video, Baidu Video and Baidu Video), with more than 1 billion active mobile users.
A website for a financial services businesses that is localized to China’s Standards
You must pay attention to certain aspects when creating your website. Because Baidu works mostly in Chinese, the website must be translated into Chinese mandarin. It must also be hosted in China so that it can be highly-performance. Content must also be localized. This means you must consider Chinese preferences and follow their lead. They used to love the unusual layout and bright colors such as red and gold.
Visibility with Baidu
A good combination of Seo and Sem strategies will help you rank your website well. Search Engine Optimization (SEO) is a way to increase traffic to your website and improve your online reputation. You will need to ensure that your website has localized domain hosting; you will need to create ad-hoc content in Chinese (simplified Chinese is for Mainland China; traditional Chinese for Hong Kong or Taiwan); link building will be necessary; the results of the monitoring will be used to adjust the campaign.
Foreign financial firms Need Link Building to Increase Their Website Authority on Baidu
Link Building refers to the strategic activity of increasing the number and quality of inbound links that a website has. This increases a website’s authority with search engines. Link building can be done by creating optimized articles that target specific keywords and which provide a detailed analysis of the topic at hand in both the article or the host site.
Press Release is crucial for the reputation of foreign firms
PR can be a popular way to promote a website or business’s product or service. These are a cost-effective and economical way to promote your company and get your message to the right people. A press release has many benefits.
- Exposure to a large audience immediately
- Affordable price
- Potential sales increases
- Major SEO benefits
- Your website will see increased web traffic
- Possibility to return customers
- Your brand will be authentic
- With Lead Generation, you can get more B2B clients for your bank.
Why your E-Reputation matter in China?
China is known for its culture of fraud and scandal. Every person has been victim to fraud at least once in their lives. Any Chinese businessmen or consumers will conduct extensive research before contacting you or collaborating. They won’t consider you if they don’t find any information online about you. The conversion process will be made easier by letting them search for you on Baidu, and then conducting research about your company.
Many financiel professionals dream of being able to generate leads.
There is less time spent prospecting and cold calling. Prospects will do their research online and find you then contact them. By increasing your online visibility via SEO/SEM and social media, you can facilitate lead generation. Your bank will be more credible and trustworthy if you are more well-known.
A Lead is simply a potential customer who is interested in a product/service offered. A careful lead generation strategy can help you build a contact list. This strategy can include both advertising and acquisition tools.
It is important to spread the word in China, especially about banking.
Word-of mouth marketing (WOMM), which is more persuasive and efficient, is one of the best ways to improve the image of a product or brand. This can be even more effective than traditional advertising. It is sensitive to discuss money and finance. If your clients are happy with your services, this will reflect positively on your bank and help you grow your client base.
Q&A power of user generating content
Zhihu and Baidu Zhidao are just a few of the platforms that can help you bank generate awareness.
Zhihu is a tool that will help you educate your clients about the services of your bank in China.
Zhihu, the largest platform in China for answering questions and providing answers, is known as “Zhihu”. It has more than 100 million answers.
Its artificial intelligence programs eliminate useless answers so that it only has high-quality content. 80% of users have a degree or higher, 30% earn at least 10.000 RMB per monthly and 40% live in cities of first- or second level. The majority of users are men. The platform is ideal for targeting older and more wealthy consumers as 78.2% have been using it for more than 25 years.
Zhihu is recommended for companies like banks that are interested in long-term brand building rather than achieving sales goals.
Chinese forums are great for organic traffic and e-reputation
In a flash, viral campaigns can disappear. A Zhihu post of high quality can last for years.
They allow good, relevant content to stay around and show up first in search results, even though they were published years ago. It also has a high domain authority, which means Zhihu posts rank higher than other platforms. There are many features on the platform that can be used for creating and managing communities around topics related to your brand. These tools can be used to interact with your audience, exchange information, and build your authority. These are just a few of the tools available:
- Zhihu column
- Zhihu bookstore
- Zhihu Roundtable
- Zhihu live
- Zhihu tip service.
- Wechat should be used by Chinese Banks to Nurture their Leads
- Dukascopy Bank on WeChat
- China does not allow mail. To communicate, most people use WeChat.
WeChat is the King in China
WeChat, a super-app similar to Whatsapp, is called WeChat. It is used by 86% of people aged 18-40.
Wechat is used by people to book holidays, pay for things, send messages (private and chat groups or text messages), and use the Kol-programs.
Wechat Official Account Required for Foreign Banks in China
You can send four push notifications per month from a service account. This account is more comprehensive because it provides additional services such as geolocalization, best visibility, multiple QR Codes, and multiple Qr codes.
It is essential to have a official account for your bank. WeChat is the best platform to connect with potential clients. It is possible to attract clients, send push notifications and have more followers. You can also redirect users to your site. Wechat articles are very similar to the newsletters users receive. It is important to make the design attractive and professional. It is preferable to design a content that is located, which will be in keeping with Chinese taste.
Three types of advertising are available on Wechat
- Kols is an agreement between an advertiser, and a well-known blogger. It will pay for the creation advertising content through a newsletter.
- banner (It is an announcement at the bottom or article mode of another official account. It is the same targeting system used in WeChat Moments ads.
- WeChat CRM for Your Bank
- Wechat CRM can be set up in the app and used to communicate with customers/followers. It can also replace a newsletter.
read more about WeChat Marketing
Your bank can also send you the latest updates on new functions, etc. This tool is essential because Chinese people don’t like to read emails. A well-designed Wechat CRM will allow you to answer any questions that your followers might have, welcome new members, and offer discounts, among other things.
It doesn’t take much time and will increase your followers’ trust.
Weibo is an open platform that can increase your bank visibility
Weibo has been one of China’s most popular social media platforms. It’s similar to Twitter. It’s an open social media platform, so everyone can see everything.
Weibo’s commercial content can have a greater impact than Wechat’s. It is easy to share on Weibo and go viral.
You can get more followers on Weibo and have them faster, but you can also have more impact on the call to action on Wechat. So you need to learn how to use both. Both can be used together. Weibo is a social media platform that helps increase brand awareness and promotes events through ad-hoc communication.
It is important to stay in touch with your Weibo users by answering their questions or offering suggestions, as well as keeping your Weibo account active. Good content is essential. You should make them easy to read and share. You will only get a few seconds to make your post stand out so don’t waste it. You can use it to promote your business. Weibo users often look for commercial offers and discounts.
Weibo ads : Ads can be placed in the search section, on Weibo’s home page and alongside new posts. Weibo allows you to target specific keywords based on user searches.
Weibo Search Engine Promotion offers companies the chance to pay an economic fee in order to be listed among the top search results. This is an effective way to increase visibility for your account.
Build a good engagement content is the best way to reach new followers and consumers. It acts as a headline that appears at top of news section on home for targeted audiences based on age, gender, location, interests, and device types.
For 24 hours, Fun Headlines will be at the top of the Follower News Section. This increases the chance of people sharing. This will make the post appear at the top as either “Tui Yan” (promoted), or “Re Men” (hot). This is a great way to increase followers and create engagement.
How can a foreign financial firms attract Chinese investors?
To find Chinese investors for your bank’s business, you need visibility. Investors will find you once your bank has a good reputation in China’s digital world. It is important to instill trust in potential investors.
Our agency can help promote your project to potential investors via both offline and online channels. We have many resources that can help you support your project from the beginning to the end.
Are you interested in entering the Chinese market together with a foreign bank? Get in touch!
Gentlemen Marketing Agency, a digital marketing agency that assists foreign companies in China, is an expert in helping them establish and strengthen their positions. We are a team of 75 digital marketers who share a passion for China.